Use of Information Technology in Controlling

JBIMS MFM Batch II - Group G Presents

Principles of Management

What is Control?Any process that directs the activities of individuals toward the achievement of organizational goals

Process where managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals

Organisation Control

Control Systems A control system contains the measures that allow

managers to assess how efficiently the organization is producing goods and services

Without a control system in place, managers have no idea how well their organization is performing and how its performance can be improved

Formal, target-setting, monitoring, evaluation and feedback systems that provide managers with information about how well the organization’s strategy and structure are working

Control Systems and IT

Step Involved in Control Process

Standards of Performance, Goals or Targets Physical Standards Cost Standards Capital Standards Revenue Standards Program Standards Intangible Standards Goals as Standards Strategic Plans

Process of comparing one company’s performance on specific dimensions with the performance of other high performance organizations

Benchmarking

Types of Control

Three Organizational Control Systems

Scope of ControlFinance

Production

Human Resources

Control through Return on Investment Profit & Loss Control Budgeting

Gantt Program Evaluation & Review Technique

(PERT)

Bureaucratic Control Clan Control

Need of Information Technology in Control

What is Information Technology Acquisition, processing, storage and dissemination of

vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications

Information technology is an interrelated component that collects, processes, stores, and distributes information to support decision making

In the Competitive Business Environment three powerful

worldwide changes have altered the environment of

business.

Why Information Technology?

Emergence of the Global Economy

Transformation of Industrial Economies

Transformation of the Business Enterprise

Emergence of the Global Economy Increasing dependence on imports and exports is emerging. Today, information systems provide the communication and analytic power that firms need for conducting trade and managing businesses on a global scale. Globalization and IT bring new threats to local businesses.

Transformation of Industrial Economies Major leading economies are transforming to knowledge- and information-based service economies. Information and knowledge intense products are becoming the foundation for many services & products. Intensification of knowledge use in the traditional products is increased. More knowledge and information intense organizations have emerged.

Transformation of the Business Enterprise The traditional firm is still hierarchical, centralized, structured, and set of specialists, depend on rigid division of labor, formal rules and plans. The new style is more towards decent., flexible set of generalists to produce mass-customization products, depend on informal commitments and goals, flexible arrangement of teams, and customer orientation for task forces.

Why Information Technology?

IT profoundly affects the way managers control their organizations. People

and processes can be monitored in ways that were not possible only a decade

ago.

Managers need to control work done at the process level - IT plays three

important roles in management control processes: Data collection,

Evaluation, and Communication.

IT has successfully enabled the development of several business applications

that are necessary for planning, implementing and monitoring the control

process in an organisation

How has IT Helped in Control

IT has helped in the development of Management Information Systems

(MIS) - a formal system of gathering, integrating, comparing, analysing and

dispersing information internal and external to the enterprise in a timely,

effective and efficient manner to support managers in performing their jobs

Important business applications under MIS include Material Requirement

Planning, Enterprise Resource Planning (ERP), Project Costing, Inventory

Control, Purchasing, Computer-aided Control of Manufacturing Machinery,

Customer Relationship Management (CRM), etc

IT has also enable the widespread use of the Internet - a global system of

interconnected computer networks consisting of millions of private, public,

academic, business, and government networks that are linked by a broad

array of electronic, wireless and optical networking technologies. The

Internet has enabled entirely new forms of interaction, activities, and

organizing in the business environment.

How has IT Helped in Control

Management Information System (MIS) Management Information System (M.I.S.) is basically concerned with processing data into information.

which is then communicated to the various Departments in an organization for appropriate decision-

making.

MIS provides several benefits to the business organization: the means of effective and efficient

coordination between Departments; quick and reliable referencing; access to relevant data and

documents; use of less labour; improvement in organizational and departmental techniques;

management of day-to-day activities (as accounts, stock control, payroll, etc.); day-to-day assistance in a

Department and closer contact with the rest of the world.

Various systems under MIS - Decision

Support Systems, Resource & People

Management Applications, Enterprise

Resource Planning (ERP), Enterprise

Performance Management (EPM), Supply

Chain Management (SCM), Customer

Relationship Management (CRM), Project

Management and Database Retrieval

Applications.

Central Database

Finance andAccountingSales

Distribution

CRM

Inventory andManufacturing

Human Resources

Example of How IT Helps in Control Through an ERP System An ERP System (Enterprise Resource Planning) is a type of MIS that integrates internal and external

management information across an entire organization, embracing finance/accounting, manufacturing,

sales and service, customer relationship management (CRM), etc. ERP systems automate this activity

with an integrated software application. It facilitates the flow of information between all business

functions inside the boundaries of the organization and manages the connections to managers/

stakeholders of the business through a Central DatabaseAdvantages• Sales forecasting• Order tracking• Revenue tracking• Matching purchase orders, inventory

receipts and costing • Consolidation of finance, marketing and

sales, HR, and manufacturing applications• Make real–time information available to

management anywhere, any time to make proper decisions

Disadvantages• Customization is problematic• Extensive training requirements• Re–engineering business processes to fit the ERP system may damage competitiveness/ focus from

critical activities • ERP can cost more than less integrated/ less comprehensive solutions

ERP Implementation Success StoryTRL Krosaki Refractories Ltd (formerly Tata

Refractories Ltd)Need for ERP• TRL provides refractory (heat resistant) products to industries like steel, copper, cement, aluminium,

glass, etc• The downturn in the refractory space in 2001, Tata Refractories turned to IT to push itself ahead of

the competition• Refractory companies were looking to enhance their manufacturing capabilities, which called for

drastically cutting down consumption of refractory products. As a result, refractory companies were forced to enhance their internal technologies to suit the ever-increasing demands of steelmakers. All these initiatives forced TR to re-engineer and streamline its complete business process to get a competitive edge.• TRL implemented the ERP known as Baan IV C4 provided by Infor Global Solutions. Today, the entire

business process of the company is designed and driven by technology.

ERP Implementation• TRL’s pre-implementation process involved creating awareness and allocating budgets• The first step to implementation familiarised employees with the changes that were likely to take

place post-implementation.• Implementation of Baan IV C4 involved 2-tier approach, 1) ‘as is’ approach, studied existing

processes and suggested various changes that would speed them up. 2) ‘to be’ approach outlined details of the changes that were likely to happen in the workflow process.• The implementation took place in a span of seven months with intensive knowledge transfer from the

technology consultant to users, together with post-implementation handholding and stabilisation.

Benefits Achieved from ERP Implementation• Complete turnaround in internal processes facilitated by monitoring activities, measurement of

performance and change management initiatives. • Entire business was driven by the use of IT. • The ERP enabled TR to successfully adopted the best business practices followed the world over to

cut costs, streamline core activities, and gain significant competitive advantage.

Conclusion The managerial function of controlling is the measurement and correction of

performance in order to ensure organisation objectives and plans devised to attain

them are being accomplished and is the function of every manager from President to

Supervisor

Basic steps in control involves 1) establishing standards, 2) measuring performance

against these standards and 3) correcting variations from standards and plans

Many overall controls are financial, one of which is profit & loss control, another is the

exercise of control through calculating & comparing RoI. Other control devices include

Management Audits, Bureaucratic control based on rules & regulations and Clan

control influenced by norms & values

A variety of tools & techniques have been used to help managers control, these include

Budgeting, non-budgetary control devices like analysis of statistical data and reports,

operation audits and time-network analysis and review through PERT

With the ever changing business environment brought about with the use of IT &

telecommunications, organisations around the world utilise various forms information

technology to monitor, analyse and control critical operations and processes

MIS of several types has significantly helped companies in improving the way they

achieve effective and efficient operations through meticulously tracking & controlling

important business processes

AnnexureGroup G Team MembersRiddhi P Ghelani - 88Vinay Hegde - 114Vishal Rajput - 116Mahmad N - 61Nakul Savani - 102Ronald Dias - 93

References

Essentials Of Management By: Koontz, Harold Weihrich, Heinz

MIS: http://www.diacritech.com/samples/interior_design/Computer-4color.pdf

http://en.wikipedia.org/wiki/Management_information_system

ERP System: en.wikipedia.org/wiki/Enterprise_resource_planning

ERP Success Story: http://www.expresscomputeronline.com/20040517/ebusiness01.shtml